By Callum Keown
European stocks fell Thursday, as the European Central Bank hinted of more monetary policy stimulus, but failed to lay out concrete details of those plans.
The Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.04% slipped 0.7%, reversing earlier gains fueled by a policy statement that lifted hopes of more easing.
Disappointing German business sentiment data pressured the DAX /zigman2/quotes/210597999/delayed DX:DAX +0.24% , and it led the region with a 1.5% drop. All major regional indexes were in the red.
What’s moving the markets?
The ECB said it intends to leave official interest rates at “present or lower levels” at least through the first half of 2020. That’s a shift from previously when the central bank said it would leave rates at “present levels” over that time period.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2006% initially fell following the statement, while European bonds rallied, pushing down yields. But during ECB President Draghi’s news conference, those moves reversed, along with gains for Europe stocks. Draghi warned that the economic outlook in the region was getting “worse and worse,” notably for manufacturing due to trade tensions and Brexit concerns.
A September interest rate cut is considered likely, though weak German manufacturing data on Wednesday had fueled some hopes for a surprise cut Thursday. “They could be forgiven for waiting until October when the new President takes charge but such clear hints today may suggest they won’t,” said Craig Erlam, senior market analyst at OANDA, in a note.
German business sentiment also fell in July for the tenth time in the last eleven months, according to Munich’s closely followed Ifo index released on Thursday.
A series of strong second quarter corporate earnings results had earlier helped lift equity markets, including Budweiser brewer Anheuser-Busch /zigman2/quotes/202879787/delayed IT:ABI 0.00% reporting its fastest beer sales growth in five years, and Danone /zigman2/quotes/205561941/delayed FR:BN +0.38% enjoying a sales boost from a rebound in its China baby food business.
Which stocks are active?
British engineering company Cobham soared 35% after agreeing to a £4bn takeover by U.S. private equity firm Advent. The U.K. defence supplier’s shareholders will receive 165p per share in cash, a 34% premium to the closing price on Wednesday.
Nokia /zigman2/quotes/203672305/delayed FI:NOKIA -1.11% shares climbed 5.7% after the Finnish telecoms firms posted an unexpected profit rise due to strong demand for 5G technology. The equipment maker said competition could intensify as its rivals look to cash in on the early stages of 5G deployment.
Barbara Kollmeyer contributed to this report